Billionaire Bruce Kovner’s Caxton Associates’s Inexpensive Picks Include General Motors Company (GM)

Caxton owned 315,000 shares of hospital company HCA Holdings Inc (NYSE:HCA) as of the beginning of April, a large percentage increase from the beginning of 2013. In the first quarter of 2013, revenue was about flat versus a year earlier with weaker margins leading to a more than 30% decline in net income. Wall Street analysts expect HCA to correct itself and for earnings to grow going forward, and as a result the trailing and forward P/Es are 12 and 10 respectively. Similarly to automakers, we think the hospital industry appears somewhat interesting and would be interested in looking at HCA and related companies.

A number of hedge funds have been taking positions in airlines ahead of US Airways Group Inc (NYSE:LCC)’s merger with bankrupt American Airlines, on the theory that industry consolidation will lead to higher prices; Caxton’s 13F shows it with about 650,000 shares of US Airways in its portfolio. The stock is cheap as many investors worry about integration risk, as well as the fact that airlines are notoriously poor investments. We’d certainly take those concerns into account, but the stock does look worthy of further research.

Conclusion.

As far as the automakers go, Ford looks a bit more interesting than General Motors Company (NYSE:GM) at this time but of course we’d also want to look at competitors such as Toyota and Honda. Investing in an airline would certainly be risky, but the industry is certainly cheap in terms of analyst expectations and might be a good source of value even if the companies involved underperform slightly.

Disclosure: I own no shares of any stocks mentioned in this article.